LEUNG HOK WAI BRIAN v. WONG KWOK HON

HCMP 309/2022

[2022] HKCFI 3733

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 309 OF 2022

____________

____________

BETWEEN

____________

_______________

J U D G M E N T

_______________

A. INTRODUCTION

1.  By an originating summons issued on 12th April 2022 (“the OS”), the Plaintiff claimed against the Estate of Wong Kwok Lai Connie (respectively, “the Estate” and “the Deceased”) for an order for specific performance of an agreement for sale and purchase dated 24th March 2021 (“the Agreement”) in respect of a property known as Flat G on the 14th Floor of Block 5 of Tanner Garden, 18 Tanner Road, Hong Kong (“the Property”), and damages.

2.  Completion of the sale and purchase of the Property has in fact since taken place between the parties on 15th July 2022. The Plaintiff therefore no longer seeks an order for completion of the sale and conveyance of the Property to him, but only damages for the delay in completion of the transaction.

3.  By an order of Deputy High Court Judge Leung of 20th April 2022, Mr Wong Kwok Hon (“Mr Wong”), the younger brother of the Deceased, was appointed to represent the Estate in these proceedings.

B. THE BACKGROUND

4.  The following is not in dispute.

5.  On 24th March 2021, the Deceased as vendor and the Plaintiff as purchaser entered into the Agreement for the sale and purchase of the Property at $9,620,000. The Agreement provided for completion to take place on 30th June 2021. Time was to be of the essence of the Agreement.

6.  On 23rd June 2021, Messrs Yip, Tse & Tang (“YTT”), solicitors for the Deceased, wrote to Messrs LCP (“LCP”), solicitors for the Plaintiff, saying that the Deceased passed away on 10th May 2021, and that her family members were considering arranging for an application for probate or letters of administration.

7.  On 24th June 2021, LCP replied, noting that the transaction could not be completed as originally scheduled on 30th June 2021, and asking for “the timetable of the deceased’s family members to apply for the Probate so that our client can update the bank as to the status of his mortgage application in order to facilitate the above transaction in a near future.”

8.  On 29th June 2021, YTT replied to say that they were waiting for further instructions from the Deceased’s family members.

9.  On 30th June 2021, LCP wrote a further letter, referring to the previous correspondence and a telephone conversation between the solicitors. The letter continued:

“We understand that you are still taking instructions from your client’s family members regarding the probate matter. Nonetheless, in view of the Completion scheduled to take place today, you have still failed to produce us the timetable of the deceased’s family members to apply for the Probate.

In the circumstances, please let us have your positive reply as to the said timetable within seven (7) days from the date hereof, failing which our client would terminate the Agreement for Sale and Purchase dated 24th March 2021 signed by our respective clients and demand for return of all the deposits paid forthwith.”

10.  On 7th July 2021, YTT replied to LCP’s letter of 30th June 2021, saying that:

“We are currently taking instructions from our client in collating the Deceased’s assets for an intended application for Letters of Administration in Hong Kong. As Swiss law of succession applies, we expect a timeframe of approximately 6 months before the issuance of the Letters of Administration, and before an Administrator is available to complete the sale of the abovementioned property.

Please kindly revert the same to your client.”

11.  There was no further correspondence in the ensuing six months. On 6th January 2022, LCP wrote to press for an update as to the progress in applying for the letters of administration, and complaining that the delay was causing prejudice to the Plaintiff.

12.  YTT replied on 11th January 2022, explaining that their previous estimate of six months of obtaining a grant of letters of administration had proved to be overly optimistic, due to the unexpected amount of assets held by the Deceased, the difference between Hong Kong and Swiss law, and the inability of the Deceased’s family members to travel to Hong Kong to proceed with the application due to Covid-19. However, it was necessary to obtain the grant, without which the transaction could not be proceeded with.

13.  The Plaintiff subsequently instructed Messrs Rita Law & Co (“RLC”) in place of LCP. By a letter of 31st January 2022, RLC sought to give notice to the personal representative of the Deceased that the Deceased was required to complete the sale and purchase within thirty days, that is, on or before 2nd March 2022.

14.  On 14th February 2022, RLC chased for a response to its letter of 31st January 2022, and further invited YTT to consider making an application for a limited grant of letters of administration for the purpose of the sale and purchase of the Property.

15.  It is the Estate’s case that despite acting with due expedition, Mr Wong was unable to make an application for a full grant of letters of administration of the Estate until 28th February 2022. The Probate Registry was closed during the general adjournment of proceedings in March and April 2022 brought about by Covid-19.

16.  Upon the re-opening of the court registries, the Plaintiff issued the OS on 12th April 2022.

17.  Mr Wong obtained a grant of letters of administration on 30th May 2022.

18.  On 8th July 2022, the parties agreed that completion of the sale and purchase of the Property would take place on 15th July 2022. Completion took place as agreed on that date.

C. THE PLAINTIFF’S CLAIM

19.  The Plaintiff seeks damages for delay in completion.

20.  Counsel for the Plaintiff, Mr Joshua Choy, cited East Epoch International Ltd v Wong Poon Ting [2010] 3 HKLRD 495, where Poon J (as he then was) held that where a vendor who contracted to sell his property died before completion, and specific performance was subsequently ordered, the personal representative of the deceased vendor’s estate would be liable for damages suffered by the purchaser due to the delay in completion.

D. THE DEFENDANT’S DEFENCE

21.  The main argument of Mr Tasman Tam, counsel for the Defendant, is that the Plaintiff failed to tender performance on the date originally fixed for completion (30th June 2021), so that time ceased to be of the essence of the contract and the parties had a reasonable time in which to complete.[1] He sought to distinguish East Epoch International Ltd on the grounds that the purchaser in that case performed his part of the bargain by tendering a cheque on the day fixed for completion.

22.  Mr Tam submitted that the obligations of the purchaser to pay purchase money and the obligation of the vendor to complete by giving an executed assignment were to be carried out simultaneously, in the absence of a term to the contrary, citing Chong Kai Tai Ringo & another v Lee Gee Kee & another [1997] HKLRD 461 at 466J-467F. In a case of completion by undertakings, which was the parties’ chosen mode of completion in the present case, the obligation on the purchaser was to tender, within time, the balance of the purchase price together with the undertakings to effect completion: East Epoch International Ltd at [36].

23.  In the event that both vendor and purchaser were at fault in failing to perform their respective simultaneous obligations, time ceased to be of the essence of the contract, and the parties would have a reasonable time in which to complete: Chong Kai Tai Ringo at 470B, citing Camberra Investment Ltd v Chan Wai Tak [1989] 1 HKLR 568 at 574.

24.  I agree with Mr Choy that this was not a case where both parties were at fault such that time ceased to be of the essence and the parties then had a reasonable time in which to complete.

24.1 There was nobody to whom the Plaintiff could have tendered performance, since no personal representative of the Estate had yet been appointed (cf. European Asia (Hong Kong) Investment Ltd at [11]; East Epoch International Ltd at [39], [41], [51]). Where a repudiating party prevents the innocent party from performing his obligations under the contract he cannot rely on the non-performance to reduce or eliminate his liability: Chitty on Contracts, 34th ed., paragraph 27-065.

24.2 Furthermore, the Plaintiff was unable to tender any cheque on the scheduled date of completion because his bank would not have provided a loan for this purpose without the Plaintiff at the same time entering into a legal charge against the Property to provide security for repayment of the loan[2] – which the Plaintiff was in no position to do in the absence of completion.

25.  Mr Tam also submitted that East Epoch International Ltd was distinguishable on the grounds that in the present case, the facts were such that it was unlikely that Mr Wong would have been able to obtain a grant of probate by 30th June 2021, so that he could not have been said to have been at fault in not having procured for the Estate to have a properly appointed personal representative by that date. However, as Poon J observed at [31], when a purchaser sues for damages for delay in completion, it is in general immaterial why the vendor failed to fulfil his obligation, and the same is true for the deceased vendor’s personal representative.

26.  I therefore do not agree that East Epoch International Ltd can be distinguished on the basis that performance was tendered by the purchaser, or that there was fault on the part of the vendor, in that case.

27.  Mr Tam frankly and fairly accepted that if the case was not where both parties were in breach, such that time was no longer of the essence, there was no doubt that the Estate was in breach of the Agreement for failing to complete on 30th June 2021.

E. QUANTUM

28.  The Plaintiff claims damages from 30th June 2021 (the scheduled date for completion) to 8th July 2022 (being the date on which the parties agreed to vary the date of completion to 15th July 2022).[3] The parties were in agreement that the market rental value of the Property during that period was $17,500 per month. By my calculation, this equates to $214,516 (being $17,500 x 12 and 8/31 months).

29.  Mr Tam submitted that whilst damages for delay in completion should normally be assessed as the value of the user of the land, generally taken as its rental value, for the period from the contractual time for completion to the date of actual completion (McGregor on Damages, 21st ed., paragraph 27-012), this measure should not apply in the present case as there was no evidence that the Plaintiff had actually suffered any loss. The Plaintiff’s evidence was that he lived in another flat within Tanner Garden (“Flat 7E”); had completion taken place as scheduled, he would have moved from Flat 7E to the Property; at most, he suffered the loss of the difference between the value of the use of Flat 7E and the value of the use of the Property.

30.  I do not accept this argument. The fact that the Plaintiff had the use of Flat 7E during the period of delay does not mean that he did not lose the use of the Property during that period.

F. DISPOSITION

31.  I therefore hold that the Defendant is liable to pay damages to the Plaintiff in the amount of $214,516 and order that the Defendant pay the same to the Plaintiff.

32.  I further make an order nisi that the Defendant pay to the Plaintiff the costs of and occasioned by this action, to be taxed if not agreed.